My audio input is a mix of my mic output and my sound card output. I'd like it to be just my mic output. I was able to do so in Ubuntu 9.04 but the interface is 9.10 is totally changed and I tried every my creativity was able to think.

It's really annoying when talking to other people over the internet because they keep hearing their voice back.

I'm not sure I explained it in clear way so I'll give you an example:

What I do:
I put an mp3 on play or a video on youtube then open a recorder and start to talk on my mic.

What happens:
both my voice and audio from mp3/youtube get reordered, even if I put headphones volume to 0 (via hardware).

What I'd like to happen:
Only my voice should be recorded.

I'm sure I'm missing some technical term, but that's the problem and I'd like to solve it in Ubuntu 9.10, any idea?

Sounds like stereomix is activated. Unfortunately I do not know where to do this in ubuntu, but you may have a look if there is a slider for stereomix in your sound options. If you find such a slider, make sure to set it to 0.